Traders and Investors on the Foreign Exchange Market

This article looks at the investors and traders on the foreign exchange market.

There are two types of people that you can find on the foreign exchange market. These people are the traders and the investors. It is important that you understand the differences between traders and investors. There are many people who do not know about the differences and assume that the traders and investors are the same. To properly use the foreign exchange market you will need to know which of these traders you are and how this affects the way you work with the foreign exchange market.

The Investors on the Foreign Exchange Market

The investors on the foreign exchange market are the long-term traders that you are going to be seeing. When you invest in the market you are going to look at the fundamentals of the currency pairs. The long-term movements allow you to have your investment mature until it reaches a profit that you are happy with. There are two factors of the market that the forex investors will be concerned with.

The first factor is the value of the trade that they are opening. The trade that investors open will be on currency pairs that have a good long-term value. These are generally the more commonly traded currency pairs because it is easier to predict what will happen in the future. These currency pairs are also considered to be more stable than the others.

The second factor that the investor will look at is the success of the trade in the future. As the investor is looking to hold onto the trade for a prolonged period of time they have to think about what will happen in the future. If the trade is not successful then the investor can lose a lot of money on the market.

The Trader on the Foreign Exchange Market

The trader on the foreign exchange market is the market participant who will work in the short and medium-term timeframes. The trader is focussed on using the forex market to make a faster profit from the buying and selling of currency pairs. The trader will use both fundamental and technical analysis to determine what they should do on the market. There are a number of factors that the traders are going to be concerned with.

The first factor is the price patterns and movement that you see on the market. These patterns and movements are what bring the profit for the trader. When you are able to analyse the movement then you can determine what will happen in the future.

The liquidity of the market is another factor that traders will be concerned about. If the currency pair that they are trading does not have the right amount of liquidity then they will not be able to trade correctly. Low liquidity can bring a number of problems from slippage to unpredictable movements on the market.

Another factor that traders have to consider is the emotions of the market. The market emotions will affect the way that you can trade and the movements that you see on the market. If you do not take the market emotions into account then you could find yourself blindsided by the movements of the market.